Buying a house in Delaware is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.
For example, homes in Dover are hitting the market at $399,450 and selling within 50 days — 22 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.
However, homes typically stay on the market longer in Wilmington, so you'll be able to take your time and potentially find a better deal.
The more you know about the steps to buying a house and Delaware's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.
No matter where you are in your home buying journey, Clever's concierge team can connect you with local real estate pros who will help you purchase your Delaware dream home!
The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!
Step 1: Save for a down payment
Your down payment is the initial portion of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Delaware want you to contribute 20% of the purchase price as a down payment. That would be $71,349 for a $356,744 home — the typical home value in Delaware.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum Down Payment (%)
Down Payment ($)
Based on typical home values from Zillow (June 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on a $356,744 home, the typical home value in Delaware (Zillow, June 2022) with a 5.44% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Delaware down payment assistance programs
Need help saving up for a down payment?
Delaware offers several down payment assistance programs to help first-time and low-income homebuyers. Although each program has its own eligibility requirements, here are a few good resources to check out:
DSHA Preferred Plus Program
The Delaware State Housing Authority (DSHA) offers its Preferred Plus program to borrowers who were approved for a DSHA Homeownership Loan. The program helps participants pay for the down payment and closing costs with a second loan. This loan accrues no interest and can include 2-5% of the total loan amount.
The program is not limited to first-time homebuyers, but participants must have a credit score of at least 620. Maximum household income limits apply and vary by county.
Dream Maker Down Payment Program
Primary Residential Mortgage, Inc. (PRMI) provides down payment assistance through its Dream Maker Down Payment Program. Financial help comes as a second mortgage of up to 3.5% of the total purchase price, and this mortgage is forgivable if the borrower makes less than 115% of the average median income for the region. If the borrower earns above the 115% average median income, they can choose between a 10-year second mortgage with 0% interest or a 30-year second mortgage with 5% interest.
This program is only available for homebuyers purchasing a primary residence with an FHA loan. Those with VA, USDA, or conventional loans don't qualify. Eligible borrowers must also have a credit score of 620 or higher.
DPA Advantage Grant Program
PRMI also offers the DPA Advantage Grant Program for buyers with FHA loans. The grant can provide up to 6.5% of the purchase price in forgivable grant money. 3% of the funds would go towards the down payment, and the remaining 3.5% can help cover closing costs.
To be eligible, you must have a minimum credit score of 620 and complete a homebuyer counseling class approved by HUD. You'll also need to meet at least one of the following requirements:
You're a first-time homebuyer.
Your household income is under 140% of the county median income.
You qualify as a "hometown hero" for being a first responder, educator, healthcare professional, civil servant, or military personnel.
U.S. Department of Housing and Urban Development
Delaware's list of alternative programs and resources is available from HUD here.
Step 2: Get pre-approved for a mortgage
A mortgage pre-approval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Delaware will require pre-approval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Delaware home.
Get Pre-approved Today!
Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?
To get a pre-approved for a mortgage, you'll fill out a mortgage application and provide details about your financial situation. They'll look at the following information to determine your mortgage pre-approval amount:
Lenders need to know that you earn enough to make your mortgage payments each month. Most lenders want your monthly housing costs to be less than 28% of your monthly income.
Lenders also consider your other debts, including credit cards, student loans, auto loans, and personal loans. They use this information to calculate your debt to income ratio (DTI) — or your total debt (including future mortgage) divided by your total income.
While some lenders will approve mortgages for buyers with DTI as high as 43%, it's best to keep your DTI under 36%.
Because of this, you might consider paying off some of your other debts before applying for a mortgage in Delaware.
Mortgage lenders in Delaware want to see that you have enough cash in the bank to cover your down payment and closing costs without completely draining your cash reserves.
While this requirement varies by lender, most want you to keep at least enough to cover two mortgage payments including insurance and taxes.
Step 3: Choose the right location
A house's neighborhood can be just as important as its layout and features. In general, you should consider the following factors when deciding which neighborhood is best for you:
What's your home buying budget?
Once you know your budget (a pre-approval letter will tell you the most you can expect to borrow), you can narrow your search to neighborhoods where homes are selling within your price range.
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years. You want to choose a neighborhood that's in your budget, but could also lead to a big return when you decide to sell.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Newark:
Home value appreciation in Newark
Once you have a list of neighborhoods with homes in your budget, you should evaluate how well each one meets your personal needs and preferences. To finalize your list of target areas, consider factors like:
- School districts
- Your daily commute
- Crime rates
- Restaurants and amenities
- Transportation options
Step 4: Find a great real estate agent in Delaware
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent should be an expert on buying a home in Delaware.
They'll help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Delaware.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. you should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Ask each of them questions about your target neighborhoods, how they prefer to communicate, and their strategy for helping you find and close on your new home. You should feel comfortable with the agent's knowledge, experience, and process before committing to an agent.
Top Local Agents Hand-Picked for You!
Clever matches you with multiple agents in your area so you can interview, compare, and choose the best one to help you buy your next home.
Step 5: Start house hunting in Delaware
Searching for homes in Delaware is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Prioritize your needs vs. wants when buying a home in Delaware
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Delaware can have a big impact on your number of options. For example, in Delaware, May has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, January gives you the fewest choices in Delaware. Historically, there are 31.8%) fewer homes for sale than during Delaware's peak season.
Housing inventory in Delaware by season
New Listings per Month
Based on June 2022 data from Realtor.com
Step 6: Make an offer
Once you find a Delaware house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Delaware, homes stay on the market for 88 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Delaware homes sell fastest in May, where the average property is only on the market for 77. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 22 days longer than Delaware's annual average.
Average time homes spend on market in Delaware
Based on June 2022 data from Realtor.com
What should your offer include?
Your real estate agent can help you decide which of these common options you should include in your offer:
- Seller concessions: You'll have to pay for most of your closing costs out of pocket when you buy a home, but you may be able to ask the seller to cover some of those costs for you. This option may allow you to offer a higher purchase price and essentially include your closing costs in your mortgage.
- Repair credits: If the home is in need of repair, you could ask for credits instead of having the seller make and pay for the repairs. The seller avoids the hassle of waiting for contractors to complete the job, and you get to oversee the repairs in the future to make sure they meet your expectations.
- Inspection contingencies: Most purchase agreements have inspection contingencies that allow you to change your offer (or back out all together) if the inspection turns up major problems. If you have a high degree of certainty about the house's condition (like if the seller can show you a recent inspection report), you can forgo this contingency to give the seller a higher sense of confidence.
- Letter to the seller: Many sellers have a personal attachment to the home. They've lived there for years and want to know the next owner will take care of the property. Writing a letter to the seller can show them how you picture your life in the house and appeal to their sentimental side.
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Delaware
Having your Delaware home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Delaware requires sellers to disclose most major issues and concerns to interested buyers. Most problems with a property can be found during a general home inspection, but it's still a good idea to do some additional tests just to be safe. Here are a few inspections all buyers should consider before closing:
Radon testing: If it's been a year or more since the seller last tested the property for radon, it's highly recommended to get a test as soon as possible. Delaware residents can sign up to get a free radon test kit here.
Termite inspection: Some loans require borrowers to get termite and pest inspections prior to closing on a home. However, getting a pest inspection is a wise move to ensure your family's safety and comfort in a new home.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
Once you finish your inspections and your lender approves your financing, you'll be ready for closing! Closing is the process of finalizing your mortgage and transferring ownership of the property.
Closing on your Delaware home requires you to complete the required paperwork and settle the closing costs. You'll meet at a title company to streamline this process and transfer the title into your name.
On the closing date, expect to review and sign several essential documents. It's recommended to study these papers ahead of time so you won't be surprised with anything on closing day.
Some of the most important documents you'll be asked to sign will include:
- Your final loan application
- The deed
- The mortgage note
After signing, you’ll pay all of your closing costs. Simply pay the total amount to your title company, and they will distribute the payments accordingly.
For homebuyers, closing costs can be divided into four categories:
- Prepaid costs: Ongoing homeownership fees that are paid up front. Mortgage lenders sometimes require buyers to pay for their homeowners insurance or property taxes ahead of time.
- Lender fees: Service fees paid to your mortgage lender for originating and underwriting your loan.
- Title and escrow charges: Service charges paid to your title company for their research, documentation, and closing day assistance.
- Other closing costs: Miscellaneous costs that vary by individual. Other closing costs may cover a pest inspection, disaster certification, real estate attorney services, or other services.
Buyers in Delaware typically pay 3-5% of the purchase price in closing costs. For a $356,700 home — the typical home value in Delaware — that's between $10,701 and $17,835!
Frequently asked questions
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Delaware neighborhoods
- Partner with the right real estate agent in Delaware
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes, but it isn't restricted to first-time buyers. The Delaware State Housing Authority (DSHA) can provide you with a 30-year, fixed-rate loan of up to $417,000. The program additionally offers down payment and closing cost assistance for eligible participants.
To qualify, borrowers must have a minimum credit score of 620. Those with a credit score below 659 are required to complete housing counseling. Maximum income limits apply and vary by county.